The fading legacy of Deng Xiaoping

After Mao Zedong’s death in 1976, it was clear to pragmatists in the Chinese Communist Party, led by Deng Xiaoping, that Maoism had not worked.

By the late 1970s, food production had failed to keep up with population growth and nine out of ten Chinese were living on less than $2 a day. But the Party didn’t want to admit the inviability of communism, its raison d’etre. Instead, it dubbed the ensuing decades of privatisation, foreign investments and lifting of price controls ‘socialism with Chinese characteristics’.

So the country remained nominally communist, even though state-owned enterprises were liquidated en masse and the private sector made up the bulk of Chinese GDP by 2005. For hundreds of millions of ordinary Chinese, like my family, reform and opening were keenly welcomed. My uncle was the first in the family to go to university; my mother found work in an international company in the city. When I came along, my childhood was not marred by hunger.

But the CCP has moved on from Deng. These days, instead of ‘socialism with Chinese characteristics’, the Party talks about ‘the new era of socialism with Chinese characteristics with Xi Jinping as core’. With the abolition of term limits and an increasingly tight grip on China’s civil society, government, military and so on, Xi Jinping had already shown himself to be an ambitious Communist leader more akin to Mao and Deng than their relatively bland successors (Jiang Zemin and Hu Jintao). But this year, as Xi reaches the end of his first decade in power, this is no longer enough. Xi wants to be second only to Mao, with Deng’s legacy a necessary casualty.

Nowhere was this more clear than in the rare Resolution on Party History published at the Sixth Plenum last November. To read the document, one would have thought that Deng was no more important in Chinese history than presidents Jiang or Hu. A nod was given to the Deng’s role in initiating reform and opening, but by and large the document commemorated the Mao years (while acknowledging the ‘mistakes’ of the Cultural Revolution) and set out the CCP’s ambitions for the Xi era. Xi’s name was mentioned 22 times, Mao’s 18, and Deng’s only six.

Those ambitions are a more assertive, centralised and socialist China, quite different to what Deng envisaged. In a country that still reveres the former paramount leader and his policies, Xi knows that he can only push through his own agenda by subtly forging a personal legacy that is greater than Deng’s. The rhetoric of the November Resolution bolsters the very real changes directed from Zhongnanhai, the guarded Beijing complex where China’s top leaders reside.

This year, expect to hear more about ‘common prosperity’. Deng was unabashed about unabated economic growth, encouraging ‘some regions, some people to get rich first’, Xi put a stop to that. These days, the CCP talks about tackling ‘excessive wealth’ (never quite defining what that means). Billionaires like Jack Ma have had their knuckles rapped through tightening regulation on debt and monopolies (in Ma’s case, a last-minute policy change meant he had to pull the listing of his fintech company, Ant Financial, valued at $310 billion).

Chinese companies now fall over backwards to pay penance for being successful – Ma’s e-commerce firm Alibaba has pledged $15.5 billion to the ‘common prosperity’ cause, and Tencent, the company behind WeChat and the game League of Legends, has pledged a similar amount of money to poverty alleviation. ‘Tencent is just an ordinary company in the greater scheme of the country’s development… [We will be] good helpers’, Tencent’s Pony Ma said recently.

There are also efforts to end the borrowing and infrastructure spending that fuelled China’s early growth. Real estate is the biggest offender, which is why the giant developer Evergrande and it’s founder Xu Jiayin have been targeted. (Former businessman Desmond Shum’s memoir Red Roulette contains a fascinating vignette of when, in 2011, Shum talked Xu out of buying a luxury yacht off the Côte d’Azur because ‘for $100 million you’d expect more elegance, dangling chandeliers’.)

Amid rumours of a property tax coming this year and President Xi saying things like ‘houses are for living in, not for speculation’, the Chinese property market has tanked. The value of home sales fell by 16 per cent in November and S&P estimates that a third of China’s listed developers could face liquidity problems this year.

This latest turn away from Deng comes on top of Xi’s already different approach to diplomacy and politics. When dealing with foreign nations, Deng’s maxim was taoguang yanghui – keeping a low profile and focusing on domestic growth (which has controversially been translated as the ominous ‘hiding your strength and biding your time’). It served the country well in the face of international backlash over the 1989 Tiananmen Square crackdown – so much so that Hong Kong would still be returned to China by 1997 and the country would join the WTO by 2001. Xi’s wolf warrior diplomacy, enshrined in Xi Jinping Thought, is the polar opposite of that approach.

In politics, the abolition of term limits and the de facto ending of collective leadership within the Politburo Standing Committee overturned two constitutional reforms Deng introduced. Presumably, having personally suffered and seen the country suffer under Mao’s unchecked power, Deng thought these checks imperative. It was also Deng who proposed the ‘one country two systems’ principle to Margaret Thatcher, vital for the peaceful return of Hong Kong. That arrangement is now dead under Hong Kong’s National Security Law, with real implications for any peaceful reunification of Taiwan. To the west of the country, in dealing with the ethnic minorities of Tibet and Xinjiang, Deng favoured pluralism, recognising their differences and encouraging cross-border trade for the sake of growth. Nobody could say that is what’s happening in Xinjiang today.

Yet turning away from Deng is not about Xi’s vanity (at least, not just). Today’s China has new and serious problems. For one, rapid economic growth came with rampant corruption and growing inequality. There is a housing crisis for younger generations, despite the fact that there are enough empty flats in the country to house the entirety of the British population, as the Financial Times worked out last year. Shum vividly documents the extraordinary extravagance of those made super rich by reform and opening (he barely blinked at spending more than $100,000 on wine at a meal). My family didn’t make that kind of breakthrough, but we knew that our lives were still much better than others in the countryside and to the west of the country, where the wealth had yet to trickle through.

Xi has been explicit that economic inequality creates social problems. He points to America’s culture wars as evidence. ‘[In] some countries, the divide between poor and rich and the collapse of the middle cause divisions in society, extremism in politics and populism runs wild - this is a very profound lesson!’ He fears that one can already start to see this in the millennial movement to ‘lie flat’, where young people are protesting the pressures of modern life through voluntary unemployment and singledom.

The strength of modern China also gives Xi options that Deng simply didn’t have. How much of his ‘bide and hide’ was a strategy of necessity when the Chinese economy was a mere 6 per cent of American’s GDP, and the People’s Liberation Army mainly equipped with Soviet cast-offs? Xi has calculated – probably correctly – that China can now throw its heft around to achieve its territorial and political goals. It can elbow others out of the South and East China seas, boycott Australian coal and wine when Canberra misbehaves, fly its warplanes over Taiwan’s self-declared airspace. It no longer needs to hide.

It’s also not simply a case of Deng the good liberaliser vs Xi the hardline Marxist revanchist.

If he were alive now, Deng may well agree with some of Xi’s approach. Deng was no softie – the tanks would never have moved into Tiananmen Square without his say so. In the process of quelling the student protests, Deng also sold out his liberal-minded protégé, the then-General Secretary Zhao Ziyang, who wanted to negotiate. Hundreds – some say thousands – of young people died on June 4 1989, and Zhao spent the rest of his life in house arrest. Zhao’s memoir, smuggled out of China and published posthumously, reflected on his erstwhile mentor: ‘Deng had always stood out among the party elders as the one who emphasised the means of dictatorship. He often reminded people about its usefulness’. For Deng as for Xi, the Party always came first.

Deng the diplomat could be charming, as Mrs Thatcher found. He’d think little of the childish jibes that China’s wolf warriors now tweet. And on the issue of term limits, his constitutional reforms were only in place for 35 years (facilitating three peaceful exchanges of power) before being overturned. Deng, who was sent to a tractor factory by Mao during the Cultural Revolution, put limits in for a reason.

Trying to divine what’s happening behind the scenes in Zhongnanhai will forever be akin to watching shadows on the cave wall. There are signs of a Dengist fightback. In September, Professor Zhang Weiyin, an economist at Peking University, warned against the common prosperity agenda: ‘If we lose our conviction in the market, bring in more and more government intervention, China can only walk towards common poverty’. Just before Christmas, an intriguing article was published in the People’s Daily. Authored by Qu Qingshan, an esteemed party historian, the article headlined ‘Reform and Opening was an awakening for the Party’ and made no mention of Xi Jinping at all. Instead, it piled praise on Deng Xiaoping and lauded the Party’s efforts in allowing the people to make the most of reform and opening. This comes on top of Deng’s own son’s caution to the Chinese leadership in 2018. ‘Keep a sober mind and know our own place’, Deng Pufang said in what was read by some as a subtle denunciation of the emerging wolf-warriorism. He made the comments to China’s Disabled Persons’ Federation (he had been paralysed in the Cultural Revolution), but the speech never made it onto the website subsequently.

Perhaps Deng Jr and these academics represent a wider movement in the CCP that opposes Xi’s direction, or (more likely) they are just a small band of old-fashioned liberals who are out of step with a Party that largely coheres around the current leader. There’s unlikely to be any real opposition to Xi Jinping as he begins his third term in this autumn’s National Party Congress. Deng Xiaoping would have wanted Xi to appoint a successor, but what Deng wants matters less and less each day in today’s China.